Sapugaskanda oil refinery to resume operations after settling crude oil issue

Sri Lanka’s Sapugaskanda oil refinery will finally receive crude oil stocks to resume its operations now following the commencement of unloading of the ESPO crude oil cargo after a new modality was agreed with the supplier, Minister of Power and Energy Kanchana Wijesekera said.

The Sapukaskanda oil refinery is ranked as the most inefficient refinery of Asia for the last 23 years by Global indexes.

The refinery has been closed most of the time due to lack of crude oil. The whole of this year crude supplies from only three ships have been refined and the refinery was closed for more than eight months.

The Sapugaskanda refinery was closed in 2021 and resumed operations in March this year and was closed again in July until it was reopened in August. It was also shut down for a week in May this year due to a technical issue.

Responding to a question, a top Ceylon Petroleum Corporation (CPC) official pointed out that state enterprises such as the Ceylon Electricity Board (CEB) and SriLankan Airlines owed the fuel supplier millions of dollars in arrears.

He noted that had the monies owed been paid, the CPC would have been able to provide the banks with the necessary rupee equivalent to the dollar price of shipments, thereby securing Letters of Credit (LCs) to import crude oil, which would allow them to refine fuel locally.

Sri Lankan Airlines has US$300 million in arrears to the CPC. The CEB, and Independent Power Producers (IPPs) owe the CPC approximately Rs. 100 billion. (Bandula)